Virtual circuits are the basis of Frame Relay service and appear in router networks as Multi-Protocol Label Switching (MPLS) label switched paths (LSPs).
A Label Switched Path is defined by entries in flow tables that direct arriving frames to their next onward destination. The Label need be unique only on a link; a value may be used by another connection on a different link. The Label on a packet may be changed by a switch during a forwarding operation.
Multi-Protocol Label Switching and Label Switched Paths have been contained within a carrier network. The “customer” never sees a label, only standard Internet Protocol (IP) and related headers. The size of standard headers make them significant consumers of bandwidth. Various forms of header compression exist and apply mostly on one link, though there are proposals (not yet usable in practice) to apply header compression end-to-end over a Label Switched Path.